Oil Markets Drop on Trade Tensions, but Fundamentals Hold Steady

Oil Prices Slide on Trade Tensions While Fundamentals Show Resilience

Key Takeaways:

• Tariff volatility is disrupting markets, but fundamentals remain steady
• Diesel demand holds while gasoline weakens
• Supply response may set the floor

Watch the full discussion below:

 

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When volatility returns, perspective matters. On the latest episode of Focus on Fuels, StoneX’s Alex Hodes, Director of Energy Market Strategy and Trevor McClanahan, Energy Risk Manager parse market panic, policy shifts, and price signals from a week that saw oil prices tumble $17 per barrel amid a flurry of tariff announcements, retaliatory trade moves, and investor panic.

With US-benchmark WTI crude oil briefly dipping below $60 – a price level last seen before Russia’s invasion of Ukraine – market participants were left scrambling to interpret headlines and forecast for what comes next. For Hodes and McClanahan, the message is clear: the selloff may have been dramatic, but the underlying fundamentals haven’t changed that fast.

How Tariffs and Trade Tensions Are Fueling Oil Market Volatility

They point to renewed tariff tensions between the U.S. and China – specifically Trump’s proposed 125% tariffs on Chinese imports (reportedly already at 145%) and China’s retaliatory 84% duties on U.S. goods – as headline catalysts with real, but still unfolding, implications. In energy terms, the demand side is hardest to quantify. Consumer uncertainty, weak gasoline demand, and softer Chinese industrial activity are all contributing to the bearish tone.

Yet, not all signs point downward. Diesel demand remains stable, and even if trade shifts disrupt crude flows, oil remains a globally fungible commodity. “These barrels will find a home,” McClanahan notes. “Whether it's China or someone else, the world needs crude.”

Why Diesel Demand Holds Steady as Gasoline Slips

The duo also unpacked margin-driven volatility, the risk of contagion across asset classes, and the market’s tendency to overshoot in times of uncertainty. With U.S. production breakevens estimated at $65 and new drilling activity already slowing in the Permian Basin, a supply-side response could begin to emerge if prices remain depressed.

Propane markets could also see collateral effects. China imports more than half its propane supply from the U.S., and tariffs could reroute those barrels to the Middle East or other buyers – potentially at lower margins.

What Energy Professionals Should Know About Hedging in Uncertain Markets

Still, both analysts emphasized restraint. “This is textbook market psychology,” said Hodes. “You have a big move, sentiment swings, and then the same traders who were buying dips get spooked by the next headline.” The view for the two remains the same: understand exposure, layer in protection, and don’t let noise override sound strategy.

Hodes will offer a deeper dive into the current market environment during a live webinar on April 15 at 2:00 PM CT. Registrants will have access to Q&A and exclusive polling insights. He will also released a timely white paper unpacking the broader implications of trade policy on energy markets.

 

Subscribe to the Podcast

Stay ahead of market moves with Focus on Fuels, StoneX's essential podcast for energy and fuel market participants. Each episode features Alex Hodes and Trevor McClanahan breaking down market developments. You’ll also hear from industry experts who explore hedging strategies and practical insights for managing price volatility. Available on all major podcast platforms, including Apple Podcasts, Spotify, or YouTube.

Dive Deeper

Explore the broader implications of tariffs, freight shifts, and trade retaliation on global energy flows in our latest white paper, “Tariffs, Tankers, and Tumbling Prices: The 2025 Oil Market Shake-Up.”

Key insights include:

• Why U.S. propane exporters may lose up to 200 Kbbd in shipments as China cuts imports
• How re-routed crude and NGL cargoes are reshaping global shipping lanes and margins
• Forecasted price pressure on Mont Belvieu propane, with prices expected to fall to 60–66¢/gal
• Revised global demand estimates and ton-mile reductions in tanker and LNG shipping activity

These insights and more are regularly covered in the Petroleum Post, StoneX’s premier research package tailored for energy professionals. Subscribe now to receive:

• Global inventory and regulatory snapshots
• Short-term price modeling and production forecasts
• Actionable trading intelligence and weekly updates

Start your 30-day free trial today

 

---Written by: Andrew Catsimanes, Copywriter

---Experts: Alex Hodes, Director of Energy Market Strategy and Trevor McClanahan, Energy Risk Manager